FBI Probes Kmart Accounting
WASHINGTON - The FBI is investigating whether former executives for bankrupt retailer Kmart have committed any crimes as the company looks to reorganize after a Chapter 11 filing in January, USA Today reports.
News of the investigation, which FBI officials say has been going on since about the time of the Chapter 11 filing, dropped Kmart stock to $1.11 a share Thursday, down 90 percent from its 52-week high.
"The FBI is looking ... to determine if there are any criminal violations for potential prosecution," says FBI spokeswoman Dawn Kenney. "There are a lot of documents to review."
Neither the FBI nor Kmart would comment on specifics. But Kmart briefly mentioned the probe in its an annual statement filed late Wednesday, in which the company also said it posted a record loss of $2.4 billion in 2001.
Kmart spokesman Jack Ferry says the retailer is cooperating with the U.S. Attorney's Office for the Eastern District of Michigan and the Securities and Exchange Commission. Kmart is conducting an internal investigation, too, Ferry says.
The federal investigation is believed to center on potential accounting fraud and other financial matters. It was spurred by a series of anonymous letters alleging wrongdoing by former CEO Charles Conaway and other executives. Conaway could not be reached for comment.
The letters were mailed to the SEC, the U.S. Attorney, Kmart board members and the Troy, Mich.-based company's outside auditor, PricewaterhouseCoopers.
Although Kmart says it expects its own accounting investigation to be completed by September, a federal probe into irregularities in accounting and other areas could last far longer.
News of the investigation, which FBI officials say has been going on since about the time of the Chapter 11 filing, dropped Kmart stock to $1.11 a share Thursday, down 90 percent from its 52-week high.
"The FBI is looking ... to determine if there are any criminal violations for potential prosecution," says FBI spokeswoman Dawn Kenney. "There are a lot of documents to review."
Neither the FBI nor Kmart would comment on specifics. But Kmart briefly mentioned the probe in its an annual statement filed late Wednesday, in which the company also said it posted a record loss of $2.4 billion in 2001.
Kmart spokesman Jack Ferry says the retailer is cooperating with the U.S. Attorney's Office for the Eastern District of Michigan and the Securities and Exchange Commission. Kmart is conducting an internal investigation, too, Ferry says.
The federal investigation is believed to center on potential accounting fraud and other financial matters. It was spurred by a series of anonymous letters alleging wrongdoing by former CEO Charles Conaway and other executives. Conaway could not be reached for comment.
The letters were mailed to the SEC, the U.S. Attorney, Kmart board members and the Troy, Mich.-based company's outside auditor, PricewaterhouseCoopers.
Although Kmart says it expects its own accounting investigation to be completed by September, a federal probe into irregularities in accounting and other areas could last far longer.